Location: Waco, TX | Metro: Waco, TX HUD Metro FMR Area
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,130 |
| 1 Bedroom | $1,290 |
| 2 Bedrooms | $1,620 |
| 3 Bedrooms | $2,120 |
| 4 Bedrooms | $2,130 |
| 5 Bedrooms | $2,471 |
| 6 Bedrooms | $2,768 |
| 7 Bedrooms | $2,989 |
| 8 Bedrooms | $3,138 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,620 | $216,514 | 0.75% | D |
| 3BR | $2,120 | $278,317 | 0.76% | D |
| 4BR | $2,130 | $380,773 | 0.56% | F |
U.S. Census Bureau data (2024)
The Section 8 thesis for ZIP code 76643 in Hewitt, TX, centers around the disparity between the Fair Market Rent (FMR) and the actual market rent. For fiscal year 2024, the FMR stands at $1,690, while the market rent, as indicated by ZORI (Zillow Observed Rent Index), is $1,730. This creates a $40 gap, representing a 2.37% difference between the two figures.
In this scenario where the FMR is lower than the market rent, landlords who accept housing vouchers face the cost of renting their properties below the open-market rate. The $40 shortfall means that landlords must either absorb the loss or seek ways to reduce operational costs to maintain profitability. Despite this, the decision to participate in the Section 8 program can still be beneficial due to the stability it offers. Voucher tenants often have a more reliable source of income, which reduces the risk of vacancy and non-payment.
Hewitt, TX, has a rental market where 31.7% of residents are renters, indicating a significant portion of the population relies on rental housing. The median home value in the area is $297,482, and the median household income is $83,511. These figures suggest that the local economy supports a mix of homeownership and rental living, with the rental segment being crucial for affordability.
Landlords considering the Section 8 program should weigh the benefits of stable tenancy against the slightly reduced rental income. Given the tight rental market and the high median home values, the demand for affordable rental units is likely strong. Therefore, accepting housing vouchers could ensure consistent occupancy and steady cash flow, even if it means accepting a slight discount on the open-market rent.
To illustrate the impact, consider a property with five units. If each unit rents for $1,690 under the Section 8 program instead of $1,730, the total monthly revenue would be $8,450 compared to $8,650. This represents a monthly shortfall of $200, or an annual shortfall of $2,400. However, the stability and reduced turnover costs can offset these financial impacts.
In conclusion, the gap between FMR and market rent in ZIP 76643 is minimal but significant. While landlords will earn slightly less per unit than they might in the open market, the advantages of a guaranteed tenant base and lower vacancy rates make this a viable strategy for maintaining yields in a competitive rental environment.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). Demographics from U.S. Census (2024).
About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.